Asian Stocks Rise as US Data Stoke Rate Cut Bets
Asian stocks climbed after the Federal Reserve’s preferred inflation gauge came in below expectations, reigniting rate cut bets. The dollar steadied.
The MSCI Asia Pacific Index snapped a six-day decline, with benchmarks in Australia, Japan and South Korea rising about 0.5%. Futures in Hong Kong pointed to gains. US equity contracts rose after the S&P 500 Index advanced 1.1% on Friday, as personal consumption expenditures increased at the slowest pace since May.
Monday’s gains would offer some respite to global markets after stocks suffered their worst weekly drop in more than three months as a stream of robust US economic data saw the Fed scale back the number of cuts it anticipates in 2025. With Chair Jerome Powell focused on inflation progress, Friday’s muted numbers will likely have reassured policymakers — and investors — that the economy is cooling despite being robust.
Australia’s 10-year yield fell six basis points in early trading, following a rally in US Treasuries after the PCE data on Friday. Treasuries were little changed in Asia on Monday.
A Bloomberg gauge of the dollar was steady after sliding 0.5% on Friday. President Joe Biden signed funding legislation to keep the US government operating until mid-March, avoiding a year-end shutdown and kicking future spending decisions into Donald Trump’s presidency.
Sentiment may quickly shift as investors look toward to President-elect Trump’s inauguration in January and the prospect of sweeping global tariffs, adding to an already torrid time in emerging Asia as sentiment toward Chinese assets wanes.
Asian stocks are set for their first quarterly loss since September 2023 while a gauge of the region’s currencies fell to its lowest in more than two years last week. China’s one-year bond yield slumped below levels last seen in the global financial crisis on Friday, as traders ramped up bets on monetary easing.
Source: Bloomberg
